Minnesota Court of Appeals Restricts When Tenants May Defend Eviction by Claiming Retaliation

In a decision filed April 9, 2018, Central Housing Associates, LP v. Olson[1],  the Minnesota Court of Appeals provided significant guidance concerning when a retaliation defense may be asserted to challenge an eviction action after termination of tenancy.

Generally speaking, a retaliation defense asserts that a tenant is being evicted because of the tenant’s exercise of their rights under the lease, state or federal law, or a complaint regarding code violations at the leased premises. The Central Housing Associates decision significantly curtails the circumstances when tenants may assert a retaliation defense. This decision makes clear that a landlord can wholly avoid a retaliation defense if the landlord follows the correct procedure.

Central Housing Associates LP (CHA) terminated the lease of tenant Aaron Olson on several grounds including unpaid rent, unpaid utilities and providing false information in the lease application. Rather than vacate, Olson filed a report with the Minnesota Department of Human Rights (MDHR) asserting, among other things, that CHA discriminated against him on the basis of disability. After the lease period ended, CHA filed an eviction action pursuant to Minn. Stat. § 504B.285, subd. 1(a)(2), which provides  for an eviction action when a person holds over after termination of the lease. Although the jury determined that Olson had materially breached the lease, it also concluded that the eviction was retaliatory. Accordingly, the district court ruled that Olson may remain in possession of the leased premises. CHA appealed.

Minnesota has two unique retaliation defenses. The first is codified at Minn. Stat. § 504B.285, subd. 2. This statute provides a defense where there has been an “alleged termination of a tenancy by notice to quit,” if the tenant proves that the termination was because of either: (1) the tenant’s attempt to enforce rights under a lease, or laws of the federal, state, or local government; or (2) a tenant’s “good faith report to a governmental authority” of the landlord’s “violation of a health, safety, housing, or building code or ordinance.” Minn. Stat. § 504B.285, subd. 2(2).

The Court of Appeals held that the statute did not apply to Olson. Under the plain language of the statute, this retaliatory-eviction defense “applies only to a ‘termination of a tenancy [at will] by notice to quit[.]’” CHA did not evict after serving a notice to quit. CHA instead terminated the lease for cause and then evicted after the tenant no longer had any right to possession. For this reason, the retaliation defense contained in Minn. Stat. § 504B.285, subd. 2(2), was inapplicable.

The Court of Appeals then considered whether Olson was protected by the separate retaliation defense contained in Minn. Stat. § 504B.441. Under that section, a “residential tenant may not be evicted ... if the eviction ... is intended as a penalty for the residential tenant's ... complaint of a violation.” A violation is defined to include violation of the health, safety, housing, building, fire prevention, or housing maintenance codes applicable to the building. Olson argued that his complaint to MDHR qualified as a “complaint of a violation” and supported a retaliation defense. The Court of Appeals disagreed, holding that the work “complaint” in this section is restricted to a civil complaint commencing a lawsuit. As Olson had not commenced a lawsuit against CHA, Olson was not entitled to assert a retaliation defense under this section. Therefore, the jury’s finding of retaliation was wholly irrelevant. The case was remanded back to the district court to award possession of the premises to CHA.

Central Housing Associates holds two important lessons for landlords. First, to avoid the possibility of a retaliation defense under Minn. Stat. § 504B.285, subd. 2, if grounds to terminate the lease exist, the landlord should issue a termination notice and then evict the tenant as a hold-over tenant after the lease has expired. Second, even if a tenant has filed a complaint with a government agency, the tenant may not assert a retaliation defense under Minn. Stat. § 504B.441 unless the tenant has initiated a lawsuit against the landlord.